Oil hits record $72.49 level

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LONDON (AP) – Oil prices briefly rose to a record high above $72 a barrel Thursday, then declined as traders locked in profits from recent rallies and Royal Dutch Shell said an oil platform damaged by Hurricane Katrina would resume producing 140,000 barrels of crude by the end of June.

Oil prices settled at a record high for the third straight day on Wednesday after weekly government data showed a drop in U.S. gasoline stocks, raising worries that refiners don’t have an adequate inventory cushion ahead of the peak summer season.

Traders also are anxious that U.S.-led efforts to stop Iran, OPEC’s second-largest member, from pursuing a suspected nuclear weapons program could lead to a disruption in Persian Gulf oil supplies.

Oil futures contracts through November 2009 are now trading above $70 a barrel, indicating traders believe high prices could be here to stay.

Gasoline inventories typically decrease this time of the year as refiners shut plants to perform maintenance ahead of the summer driving season. But there is additional worry about summer gasoline supplies this year because of the prospect of tight supplies of ethanol, which is needed in increasing amounts as refiners phase out their use of methyl tertiary butyl ether, or MTBE – an additive that helps gasoline burn more cleanly but which has been found to contaminate drinking water.

Light, sweet crude for May delivery on the New York Mercantile Exchange rose as high as $72.49 a barrel in electronic trading in Asia, surpassing the previous record of $72.40 set during Wednesday’s trading. The price slipped back to $71.20, down 97 cents from Wednesday’s record closing price of $72.17.

Royal Dutch Shell Plc said Thursday its Mars platform – the largest oil platform in the Gulf of Mexico damaged by Hurricane Katrina – would be producing at pre-Katrina levels by the end of June. Mars accounts for about 5 percent of total Gulf of Mexico production.

In its weekly report, the U.S. Energy Department said Wednesday that the nation’s supply of gasoline shrank by a larger-than-expected 5.4 million barrels last week to 202.5 million barrels. The decline, the seventh in as many weeks, pushed gasoline stocks to 4.6 percent below year-ago levels, their lowest level since November.

Concerns about Iran continue to lift oil prices. Diplomats said Wednesday the United States may turn to the U.N. nuclear watchdog agency to exert more pressure on Iran out of frustration with Russian and Chinese opposition to firm Security Council action.

On Wednesday, Iranian President Mahmoud Ahmadinejad said record crude oil prices were still below their “real value,” though he stopped short of saying Iran would use its vast resource as a weapon.

The U.S. Energy Department report also showed that crude oil stocks fell by 800,000 barrels last week to 345.2 million barrels, while distillate stocks, which include heating oil and diesel fuel, fell 2.8 million barrels.

Brent crude for June rose to a record high of $74.22 a barrel on London’s ICE Futures exchange before retreating to $73.75 a barrel Thursday.

Gasoline futures declined 2.44 cents to $2.215 a gallon on Thursday while heating oil prices fell less than half a cent to $2.0575 a gallon. Natural gas prices fell more than 4 cents to $8.150 per 1,000 cubic feet.

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